Credit Unions can expect at least a 22% increase and...Read More
Creating economic scenarios through the COVID-19 crisis continues to be a challenge. In the last week we had new economic data reporting on conditions three weeks ago heralding the creation of 4.8 million new jobs. At the same time, reports of skyrocketing coronavirus cases are causing businesses to re-close and some of those same newly rehired people to be laid off again. We will not know for another month how many people are losing their jobs again, but continued job growth seems doubtful for a while.
The most recent economic data does not require significant changes in our scenarios. The V and W scenarios already aligned with these updates. The U is revised to carry forward from current unemployment levels.
A V-shaped recession assumes that by mid-summer we see a dramatic wave of businesses reopening and employees being rehired. This would be driven by a resurgence of consumer confidence. That can happen if the following proves to be true: (1) the asymptomatic population proves to be so large that we are already more immune than we realized. A recent Swedish study reinforces this view. (2) Dexamethasone continues to reduce mortality and ICU visits by one third. (3) Hospitals are prepared now for the level of cases that come in. (4) Many businesses are able to reopen with a low-density business model or other innovations. All of these are true to some extent, so a V is possible, although it’s difficult to say how much so.